Indonesia and Japan Strengthen Energy Transition and Digital Economy Cooperation

Jakarta, INTI - To enhance bilateral cooperation between Indonesia and Japan, Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto, held a meeting with Secretary-General of Japan's Liberal Democratic Party (LDP), Motegi Toshimitsu, who also served as Japan's Foreign Minister from 2019 to 2021, on Monday (29/07).

The meeting, held at the Coordinating Ministry for Economic Affairs office in Jakarta, discussed various areas of cooperation, including Indonesia's accession to international forums, energy transition, digital economy, automotive industry, and global geopolitical developments.

Cooperation Under the Asia Zero Emission Community (AZEC)

The meeting discussed cooperation under the Asia Zero Emission Community (AZEC). The Indonesian and Japanese governments formed a joint task force to implement AZEC in September 2023. Minister Airlangga hopes the Japanese government will continue to support the implementation of projects under this Forum, which includes cooperation in power plants, including hydro, geothermal, and solar power, as well as electricity transmission networks.

Minister Airlangga and Secretary-General Motegi Toshimitsu also agreed to promote tangible results from AZEC cooperation, with Indonesia set to host the Second Ministerial Meeting of AZEC on August 20-21, 2024. Indonesia and Japan hope to realize several priority projects for Indonesia within AZEC.

"Through AZEC cooperation, priority energy transition projects between Indonesia and Japan should be realized, including the Muara Laboh Geothermal Power Plant (PLTP), Legok Nangka Waste-to-Energy Plant (PLTSa), Smart Gridline, and Small Modular Reactor (SMR)," said Minister Airlangga.

Potential Cooperation in the Digital Economy Sector

In addition to energy, Minister Airlangga and Secretary-General Motegi Toshimitsu also discussed potential cooperation in the digital economy sector. Minister Airlangga cited the progress of digital economy cooperation in ASEAN through the Digital Economy Framework Agreement (DEFA). Currently, several ASEAN countries can utilize the Local Currency Settlement (LCS) scheme for cross-border digital transactions. With this scheme, SMEs in ASEAN countries can conduct digital transactions using their local currencies, reducing dependency on cross-border transactions using the US dollar.

During the occasion, Minister Airlangga also expressed gratitude and appreciation for the cooperation from the Japanese government and private sector in promoting trade, investment, energy transition, and the digital economy in Indonesia. One example is the role of Japanese investors in the growth of start-ups in Indonesia. Japanese investors have significantly contributed to the growth of Indonesian start-ups into Unicorns and Decacorns in Asia.

Japan's Support for Indonesia's Accession to CPTPP and OECD

Japan has also fully supported Indonesia's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the Organisation for Economic Co-operation and Development (OECD). Indonesia's membership in these organizations will accelerate its economic transformation and expand market access for Indonesian products in developed countries. One such potential is the export of Indonesian automotive and electric vehicles to CPTPP member countries.

Cooperation to Maintain Stability in the Indo-Pacific Region

Furthermore, Minister Airlangga and Secretary-General Motegi Toshimitsu also agreed to cooperate in maintaining stability and peace in the Indo-Pacific region. Both countries are committed to reducing geopolitical tensions in the region, particularly preventing conflicts in the South China Sea, the Korean Peninsula, and the Taiwan Strait. This can be achieved by promoting economic cooperation among countries in the region.

Latest Statistics and Conclusion

According to the latest data from the Investment Coordinating Board (BKPM), Japanese investment in Indonesia continues to increase annually, reaching USD 4.3 billion in 2023. The renewable energy and digital economy sectors are the main focus of this investment, with several major projects currently in the planning and implementation stages.

Bilateral cooperation between Indonesia and Japan is expected to continue growing and providing tangible benefits for both countries. With support from the government and the private sector, Indonesia and Japan are ready to face global challenges and seize opportunities to create a better and more sustainable future.

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